New price reports seen boosting non-GMO, organic markets

WASHINGTON, Sept. 3, 2015 - Keeping up with the growing demand for non-GMO and organic products is proving to be a challenge. The Agriculture Department is betting that providing farmers with information on market prices will help.

USDA’s Agriculture Marketing Service this week launched its first weekly report on prices for non-GMO corn and soybeans. According to the report, non-GMO feed corn is selling for significantly more than the conventional, genetically engineered versions. The report had no prices for soybeans or for food-grade corn.

The reports, which are based on information gathered from an undisclosed number of elevators, could increase the market for non-GMO grain and in turn encourage farmers to transition to organic.

Many farmers have been reluctant to seek organic certification because they can’t market their products during the three-year transition period when they have to follow USDA’s organic standards, which among other things bar the use of biotech seed.

Companies “have come to us and said that one of the impediments to their growth … is getting producers to switch over, because there’s not a lot of reliable information in terms of the prices being paid,” said Craig Morris, deputy administrator of AMS’ livestock, poultry and seed program.

In May, food maker SunOpta Inc. became the first food manufacturing facility in the United States to be approved for a process verified program for non-GMO products.

Meanwhile, Congress is debating legislation that would preempt state labeling laws for biotech crops and set up a USDA-run program for regulating non-GMO labeling.

The non-GMO reports are the latest in a growing list of specialty market reports that USDA is compiling, with more to come.

Reports on grass-finished beef started in 2013, and in the next six months the agency will be rolling out reports on pasture-raised pork, free-range chicken, farm-raised catfish and commodities grown by American Indian tribes.

USDA also is posting reports on prices at many farmers markets. The latest report from Iowa, for example, puts the average price of rhubarb at $2 a bunch, while heirloom tomatoes are going for $3 a pound and ears of sweet corn are fetching $5 to $7 a dozen.

According to the non-GMO corn report, the average price of non-GMO corn elevators are receiving is $4.06 a bushel. By comparison, September corn futures were trading for under $3.50 in Chicago on Thursday although the price was closer to $3.70 when the USDA report was compiled.

Lynn Clarkson, president of Illinois-based Clarkson Grain, said the reported price is within the reasonable range of what is being paid.

Citing confidentiality concerns, AMS doesn't release the number of entities whose trade data have been used in compiling a report, but there had to be at least three. The agency won't list an average price for a commodity unless it obtains reports of at least three trades from three separate entities, said Randy Hammerstrom of AMS' Livestock, Poultry and Grain Market News division.

For USDA, the new reports present something of a chicken-and-egg problem. Starting the reports, even with a small number of entities reporting, encourages others to start participating, Morris said.

“When you put a report out, and you have a couple of market participants, others start saying, ‘Hey, we want our reports in there as well,'” he said.

The initial AMS report said, “Demand is very light with inactive market activity. Harvest is a few weeks away and last year’s crop is hard to move with new crop just around the corner.”

AMS is initially trying to obtain data for future delivery contract prices and spot market cash prices paid to producers. The agency eventually hopes to add prices for short-term and long-term contracts and farm-gate prices.

This week’s guest on Open Mic is Ken Dallmier, President and COO of Clarkson Grain Company. While the global grain business is dominated by supply, demand and now trade wars, this Illinois-based company functions under a customer-focused mindset. Dallmier says this generation of consumer demand is dominated by a different set of social values leading to questions over the way food is produced and the prices they’re willing to pay. Sustainability, organic and non-GMO are providing farmers an income stream isolated from traditional market forces.

Department of Transportation Secretary Elaine Chao and Environmental Protection Agency Acting Administrator of the Andrew Wheeler recently announced their intent to reassess and correct the Corporate Average Fuel Economy standards.

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